Mrs. S is faced with the possibility of being sued and held liable for the damages...
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Mrs. S is faced with the possibility of being sued and held liable for the damages this coming year as a result of a third party accident. The probability of being sued successfully by a plaintiff is 65%. The payment to a successful plaintiff is BDT 80,000. Mrs. S's total wealth will be BDT 200,000 at the end of the year if she is not sued. Ignore the defense and other transactions costs. i. Calculate the expected end of the year wealth with no Insurance coverage. Mrs. S is faced with the possibility of being sued and held liable for the damages this coming year as a result of a third party accident. The probability of being sued successfully by a plaintiff is 65%. The payment to a successful plaintiff is BDT 80,000. Mrs. S's total wealth will be BDT 200,000 at the end of the year if she is not sued. Ignore the defense and other transactions costs. i. Calculate the expected end of the year wealth with no Insurance coverage.
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